MOTIVATION. WHEN IT’S NOT ABOUT THE SALARY or one article with some real-life advices
Table of Contents
2. Is salary enough?
3. Other financial incentives
4. Non-financial intangible incentives
5. Tangible incentives not related to salary
6. My top list of motivations
8. Recommended books
11 years ago I learnt about Carl Sewell, one of the most famous car dealers in the United States, and read his book Customers for Life. Quite a big part of his book was devoted to the employees. For the first time in my life I got acquainted with someone who shared my ideas about motivation. Certainly, my opinion how to treat employees was not so structured as Carl’s and my knowledge was far from being profound, but I got a clear evidence that employees could be and SHOULD be treated differently.
Since that time, and especially after I founded my own business, I have always been open to hear stories from others how they motivate people. And in this article I would like to share my experience and discuss other, than salary, motivation factors.
Is salary enough?
In 1943 Abraham Maslow proposed his famous theory, known as ‘Maslow’s Hierarchy of Needs’, usually depicted as a pyramid. Although a bunch of scientists used to criticise it (I guess they were just jealous and wanted to become famous, too), that hierarchy perfectly fits into the motivation system. Surely there are always exceptions, but my personal observations say that quite a small part of people is ready to work gratis when they have nothing to eat. You need to pay a sufficient salary. No good manager wants his employees to be poor and miserable!
Decent salary is a good motivation factor, but, as a rule, it becomes a temporary incentive. In a year or two the job may seem to be boring. However, bigger salary does not mean the employees will work harder, or be more productive, or make fewer mistakes. A salary increase may become a new temporary incentive as well. One of the brightest examples of a company where people are motivated without high salaries is the Southwest Airlines, the world’s largest low-cost carrier. Southwest created their own unique culture of like-minded people, and people are ready to earn less but to be a part of it. There is a queue of those who want to work in that company.
Do not forget that technologies can be copied, products can be copied, structures can be copied as well. People are your only asset. According to Jim Collins, right people are your only asset, and I totally agree with him. And here come other motivation factors how to make your people become employees for life.
Other financial incentives
It’s a real-life example. Carl Sewell pays his employees as partners. The pay is extremely competitive. The pay is mostly based on bonuses. Only confident, energetic, proactive, let’s call them champions, can survive here. Lazy guys (those who want to receive a big salary doing nothing) do not stay here for a long time. And by rights, Sewell Automotive is considered one of the best car dealers in the USA.
One of his rules: do not be greedy! If they get 10% of the profit, the company gets the rest — that is 90%. It is a huge amount of money! Help them to earn even more, and the company profits will rocket up.
As it often happens, once an employee starts to earn a lot of bonuses, the company decides to decrease them. At the end of March 2012, the new Director of one of my previous companies cancelled all bonus payments. I lost few very talented team members and in a fortnight’s time quitted as well. I do not know whether it was the most fatal mistake or not, but only 5 of more than 100 employees remained in the company by 2015, and it lost the market share.
I can not explicitly recollect the survey that was conducted in the UK at the end of the 90-s. The researchers asked something like ‘What unexpected sum to receive will make you extremely happy?’ The British told that it should be some 1,000 pounds. Do not forget the UK is a highly developed and wealthy country, their average salary being far larger than 1,000 pounds.
That survey proves that you do not need a considerable amount of money to make your employees happy.
Non-financial intangible incentives
Plenty though they are, I would limit these incentives to three:
- right people
Gratitude. When did you hear last time a (I stress this word) sincere Thank you! from your Boss? Such gratitude is one of the most powerful incentives, just because it is from the Boss, and especially when it comes from the Big Boss. Do you remember your emotions? Unfortunately, some of us will never experience them because not all managers are good psychologists and understand the power of Thank you!
I was lucky to get several such acknowledgements and I do remember my first one:
The company imported pumps. For this industry, winter is typically a dead season, not a low season — it is actually dead with almost no payments from customers. At the end of January 2005, I was the only salesmen to receive a payment, and the payment was large. The same day, the owner of the company came to the office, approached me, grasped my hand, and said that magic Thank you! Later I learnt that the company had not enough money to pay salaries, so my sale was just in time. I guess I was inspired at least for the next couple of months by his Thank you! Oh gosh, it was like I drank a crate of Red Bulls and it gave me multiple wings!
You may think it is nonsense and consider that to be a small thing. But small things matter, though they are not small indeed. It will cost you no money to say thank you to the employee who deserves it. But the consequence of that gratitude can be quite profitable for both you and the company.
Right people. I would like to cite Jim Collin’s Good to Great ‘Second, if you have the right people on the bus, the problem of how to motivate and manage people largely goes away. The right people don’t need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great. Third, if you have the wrong people, it doesn’t matter whether you discover the right direction; you still won’t have a great company. Great vision without great people is irrelevant.’
And his example of Nucor, the largest steel producer in the Unites States, ‘The Nucor system did not aim to turn lazy people into hard workers, but to create an environment where hardworking people would thrive and lazy workers would either jump or get thrown right off the bus. In one extreme case, workers chased a lazy teammate right out of the plant with an angle iron.’
The last sentence is fabulous! Once you hire right people, the life of the company will become far easier, as the employees may efficiently control themselves and their team-mates as well.
Competition. We love to compete. We love it from childhood. It does not matter how you compete, by playing active sports, or chess, or computer games. It is inherent. Were you proud when your school football team won a game against other school? Of course, you were!
One of the competition examples can be illustrated by GE. Jack Welch, former CEO of General Electric, was named ‘Manager of the Century’ by Fortune at the end of the 90’s. And that guy knew for sure how to motivate people, though those who had been fired by him would not agree.
Apart from different merits, Jack is also famous for launching a 20-70-10 ranking system (ABC). 20% are the best employees and they get most perks. 70% are good enough but strive to become a part of 20%. And 10% are fired every year. 10% to be fired! You should have real guts to launch such system, and Jack did have them!
You may think it is a cruel system. Pardon me, but why should you allow weak employees to drag the company down? Better your competitors hire them and suffer (it could be a wise strategy). Yes, there was a resistance against ABC; for instance, managers used to fire those who had already been fired or even died few months before.
Did ABC helped GE? Certainly. The company was famous for raising a whole constellation of leaders in 80-90’s.
Tangible incentives not related to salary
My team in Teplobud usually worked very hard. In 2008, for few weeks in a row they had to work on Saturdays, because we got a lot of orders and wanted our customers to be satisfied in time. I was looking for a way how to thank my team. I felt that just Thank you! was not enough in that occasion.
My wife suggested a brilliant idea: as they worked hard, we needed to restore their stamina. She called it a basket of energy. It was literally a fancy wooden basket full of fruits, cheese, cooked meat, sweets, and a bottle of Italian wine for each of my team members. You should have seen their delighted eyes!
One of the cheapest ways to express your gratitude is to write it down on a small card. The message can be different, like ‘I saw how/ when/ what you did… That was amazing!’ or ‘You were great because…’ Use your imagination. Better write with your own hand and present it personally. It costs you nothing, and your employees realise that their efforts do not pass unnoticed. It motivates, believe me.
When a project or sale are long and seem to last forever, your employees need a special treatment as well. After you finish that marathon, do not work! I call it ‘Friday Pizza Day’. Some may celebrate in the office, others may go on a picnic or even go to Spain for three days. It depends on a company, its budget, and the results of the marathon. Please, do not forget that employees are not horses or, at least, can not work as horses all the time.
I prefer to work with women; I found them to be more stable comparing to men. Women love flowers (we can not judge them for that). However, quite a lot of women hate to receive flowers only on special occasions, like birthdays or holidays. For them, it seems like men remember about their existence only few days a year. What can you do? You do not need to invent a holiday, though you may try. Just buy a flower or a bouquet and lay on the table of every woman in your room/ department/ office in the early morning when they are still out (do not forget to thank me next day for that advice). Make them happy and do it from time to time!
My top list of motivations
1. Right people in your team. Right people is a must! Do not allow not right people to demotivate others and ruin your company.
2. Thank you! from your boss, colleagues, team-mates or subordinates for the well-done job. Use this phrase sincerely! It is a real power. By the way, Bosses like to hear Thank you!, too.
3. ‘Friday Pizza Day’ for hard work. Not every Friday (or other day), only when your people really deserve it!
P.S. Decent salary and some bonus system come by default…
Richard Foster in his article Creative Destruction Whips through Corporate America (2012) forecasts that 75% of the firms listed in the Standard & Poor’s 500 will be replaced by new companies by 2027.
If you do not want your company to suffer the same fate, please, examine other, than salary, motivation factors and make the life of your employees more pleasant and comfortable. They will be grateful, and your company will thrive more and more.
Jim Collins (2001). Good to Great: Why Some Companies Make the Leap and Others Don't.
Lorraine Grubbs-West (2005). Lessons in Loyalty: How Southwest Airlines Does It — An Insider's View.
Bob Nelson, Dean Spitzer (2002). The 1001 Rewards & Recognition Fieldbook: The Complete Guide.
Carl Sewell, Paul B. Brown (2002). Customers for Life: How to Turn That One-Time Buyer Into a Lifetime Customer.
Jack Welch, John A. Byrne (2001). Jack: Straight from the Gut.